The Asian and Australias Trade Environment - Coursework Example

International Market Name Course Tutor Date Why do Firms Internationalize? In today's business environment, even small businesses are competing with international businesses. Companies expand business for increased sales and expanded markets that lead to more profit. This expansion help business grows in different dimensions; the company's product line may choose to enhance. Companies that have a foothold in many countries do not have to repent on one country's economic ups and downs; also they can protect their investment by dealing with different currencies respect to many countries while the recession in one country also does not force companies to shut down. Bartlett and Ghoshal on Internationalization Three approaches (global, international and multi‐domestic) for multinationals were recognized to supervise the external and internal pressures of globalization and Localization within product‐markets1. Global strategies are predicated on an integrated (economic) world market appreciating companies to approve a common product‐market strategy across countries. With the political boundaries and social ethnicity impact on the nature of institutions, global strategies may be less useful2. The choice of a specific strategic model should be done through an overview of the forces that push the MNC towards global integration, global differentiation or both. The strategic choice should significantly fit the pressures of the environment, where MNCs must strive to build the strategic tendencies wanted by e.g. consumers3. Multi domestic strategy (high pressure for differentiation, Low pressure for integration) It focuses on responding to local market demands. The structure of the MNC will be based on a portfolio of rather independent national companies continuing their own entire value chain. The innovation and information developed at these national companies will most likely reside there, and will most likely not be dispersed to other companies within the MNC. International (Low pressure for integration, low pressure for differentiation) This strategy relates to home country exports. The mainstream of the value chain will be maintained at the head office. Technology integration, Production and general management systems will be planned and developed at home country. The knowledge will be distributed by the home organization to the subsidiaries. Global (High pressure for integration, low pressure for differentiation) This strategy is particularly based on scale economies. The contribution of the MNC is rather fragile and a full value chain will only exist at home. The subsidiaries are tightly joined in the home organization, dependent on the resources and knowledge of the home organization. Innovation and development to be done at headquarter and later diffused to residual subsidiaries4. Australia in the Asian Century White Paper China and India have tripled their shares in the global economy and increased the absolute economic sizes almost six times. By 2025, it is estimated that the region as a whole will account for half of the world's output5 . Australia is rightly located around the Asian region and can make the most of the opportunities that will be flowing from Asian century. Australia has one of the strongest economies in the world with the lowest unemployment rate and high trade terms followed by large-scale production. According to Julia Gillard, Prime Minister of Australia, she has shaped the Australia in the Asian century white paper as the clear decision for the nation to take part in national future. Transformation in the Asian region into a powerhouse for the world's economy is not stoppable, and Australia is well prepared for the strategic shift of economic growth. Australia has strong relationships with US, China and Korea that will benefit them and calls the nation to be more Asia-literate nation that reflects their strategic development of not internationalization of any single business but from one country’s economy to put finances for taking part in another region’s economy6. USA and the European Union to form biggest free trade alliance The US and the European Union agreed on Wednesday for launch in June to create the world's biggest alliance of free trade as a benchmark for the competitors to follow7. The report includes a deal enhancing the EU’s economy by about 0.5% and the US economy by about 0.4% by year 2027, with €86bn of additional annual income for the earlier and €65bn for the latter. European Commission president, Jose Manuel Barroso, told in a conference that this initial negotiation would set the standard for the future trades and investment, regulatory issues and the development of rules of global trade. The emergence of international market has enabled the business to be able to complete in the global market. For companies to compete in the global market they need to use effective strategies, the strategies that will enable companies compete effectively are; Strategies that assist the company to be success There are few strategies have been used to assist a company to be a success in the international market place. Based on (Barlett & Ghoshal, Managing Across Borders : New Organizational Responses 1987), “they believe a proper structural among product, functioning of each unit, and area of expertise will be a function of the management character, the history of the company and its long-term goals.” There are some successful companies that modified the assumptions that Bartlett and Ghoshal identified into a more flexible guideline which are managing uniformly and manner of national operations; relationship in the company’s employees, and corporate management provide clear decision making. One of the successful company has modified the traditional symmetrical to a different business structure is Unilever. Transforming the business structure One of the company successes by transform a symmetrical to a differentiated business structure is Unilever. During the oil crisis, the every department in the company collect information and managers aim for the environment’s needs8. The company business structures have regional and national levels because it helps them to differentiate the products importance in different markets. For example, European countries are more dependent in the product development and competitive strategy9. Unilever begins to create a system that central coordination the European product development. Therefore, each market has its own characteristic to determine the product in global integration and national differentiation. Corporate management This is one of strategies for the company to be successful and have a good communication within the organization. According to (Barlett & Ghoshal, Managing Across Borders : New Organizational Responses 1987), this strategy allows the each unit to know its position and easier to understand its function within a big picture. The top managers will need to take note on the employees and provide them with training to help them in their work. This will be important for the human resources department, whereby they will need to align the company design and management skills10. In order to have a sustainable competitive advantage in the company's human capital, there are three tasks that needed to be strategic in human resource, which are building, linking and bonding. The challenges for the building are the company will have to screen through the recruitment to have the best among all for the suitable job position in the organization, and they will have to budgeting their cash flow to expect future salary, training costs and benefits over the payments in future11. Linking refers to “a value in attracting and developing individuals who hold specialized knowledge in the social networks that enable sharing of that knowledge"12. This will require the top human resource executive to build a break down hierarchical barriers and form a cross-unit communication to link with the isolated individuals and organizations units into dynamic social network. For example, creating groups in business units to review another's goals and business plan to improve the performance of the worst performance. Lastly, the bonding process is whereby it helps to develop the engaging, motivation and bonding culture to keep the talented employees13. This will likely to provide an employee contract to secure them by providing contracts that provide opportunities for personal and professional growth. Interdependent relationship Interdependent relationship is very valuable for a company because it helps to create a relationship between the society and the employees. In order to be a success in this relationship, basic product interdependence that built through integration of manufacturing operations14. This is where the goods need to be able to attract to the local. Also, having a geographical spread between the units with the intelligence, ideas and knowledge will able to achieve a successful interdependent relationship. One of the successful interdependent relationship companies is Philips. The company gave the responsibility of human resource, function and technical to the board members to achieve the strategic goals. They also transfer information between the units rather than the people15 Discuss on the two latest developments For the White paper Australia, the organization is likely to be needed more resource to be expanding their sources to the society. As we know that, the relation on the latest development is to be an increase the trading relationship between Australia and Asia, other than that, opportunities for the Australian to have a closer education and cultural society between Asia. This will also able to help the company to have more opportunities to acquire more interest of the skilled worker to be interest in their corporate. This will be helping the future of the Australia by stability and sustainable security of their diverse region. As these improves the people-to-people links to increase the benefit in the economic and social. However, the resources needed will be much more as the corporate management statement provided by Bartlett and Ghoshal. On the second development, potential of begin alliance for USA and the European Union will be creating a free trade alliance that increase the both country economy. This will require both countries to conduct more research to acquire information about the society and to produce more products that attract the local's need. Besides that, this will able to help the local organization to be expanding their resources as they are going to adapt other culture in other region. Opportunities of increasing skilled employee will be appear in this alliance form as well. Recommendations China has emerged as Asia’s new trade powerhouse; it accounts for 29% of Australia’s export market. The future of Australia is not pegged on its trading with china; the country needs to diversify its investment opportunities to other Asian countries that offer a ready market for Australian goods and products. In order, for Australia to position itself to be one of the major trading partners in the wake of the international market, the country needs to invest more on its education. This will enable the country to have an educated population that will serve the needs of the whole Asian and international market; when the economy of the Asian continent overtakes the European and the North America’s market and economy combined. The aim of this is to awake Australia’s potential as a growing giant in the world, by enhancing its competitiveness in the global stage. The other recommendation is for the Australian government to improve the international environment for the Australian businesses: this will restore and improve the level of economic engagement between the Australian firms and other firms in the global market. The Australian market can be enhanced by the government its multilateral and bilateral agreements between other countries and global institutions. These efforts and devoutness by the government will enable the country to breakdown existing trade barriers that hinder trade between the Asian and Australia. The Australian government should actively explore other trade and economic ties with other Asian countries that offer substantial opportunities for the Australian businesses. Other countries in the Asian continent are emerging to be powerhouses in the whole world; Australia should seek to foster, form and cement economic ties with these countries, like India, China, Taiwan, Singapore, and Korea among other countries. The Australian government should increase its operations of the labour market; the easily availability of the labour market offer substantial economic opportunities for countries. Companies tend to set up shops in countries that have a readily available labour, the operations of the labour market will enable the country to have cheap and easily accessible labour and workforce. There are various ways in which the country can use to make operational its labour market, and this includes; alignment the training of the labour force programs with those of the other countries in the world, this will create a labour force that is highly competitive world over. The country can also relax the labour force rule that will make much easier for foreigners to work in the country. The country can also, implement mutual agreeable policies that players in the sectors recognise to be the practice world over. The strategic recommendations and choices should significantly fit the pressures of the environment; companies that participate in the free trade areas or the international market should be able to participate in the formulation of rules and policies that govern and regulates their operations. This will lead to a much better operating environment, and much lower taxation environment in the various countries that the companies operate. The mutual understanding and recognition by both global businesses and countries will enable the streamlining the various red tapes and structural bureaucracies that exist in the global arena. The working together of all players in the international market will enable countries will eliminate the economic inefficiencies that exist between different regional and geographical trading blocs. The internal market has enabled companies to transform their business culture and realign them to be global practices. The interplay of all this corporate realignments and countries making the operating environment much friendlier has enabled transaction costs to reduce effectively. The reduction in transaction costs is also brought about by the reduction in red tapes and the implementation of policies that make the operating environment much friendlier. Conclusion International markets have open up the business environment in all the economies of the world. Companies are now competing in the global arena; the small-scale traders are now operating in a much more competitive environment than before. This report evaluated the Asian and Australia’s trade environment and the emergence of the internal market and how it affects companies today. This report evaluated the strategies that companies should employ in order to compete in the international market effectively. The recommendations that this report came up with should be implemented fully in order to realize the full gains of the international market. References Barlett, A. C.& Sumantra G. «Building Competitive Advantage Through People.» MIT Sloan Management Review 4 43, 34 - 41 (2002): MIT Sloan Management Review. Barlett, A. C.& Sumantra G. Managing Across Borders : New Organizational Responses.» Sloan Management Review 29 , vol.1 (1987): 43- 53. Bartlett, A. C& Sumantra G. «Changing The Role Of Top Management : Beyond Systems to People.» Harvard Business Review 28 , vol. 4 (1995): 132 - 142. Blenkinsop, P., & Ethan B. US, EU to embark on talks to form biggest free-trade alliance. 2013. http://www.bdlive.co.za/world/2013/02/13/us-eu-to-embark-on-talks-to-form- biggest-free-trade-alliance. BusinessMate. Global strategies for MNCs: Christopher A. Bartlett ; Sumantra Ghoshal. 2009-2010. http://www.businessmate.org/Article.php?ArtikelId=13. Government, Asutralian. Australia in the Asian Century White Paper : Executive summary. 2012. http://asiancentury.dpmc.gov.au/white-paper/executive-summary. Government, Australian. «Australia in the Asian Century White Paper .» Australian Government. 2012. http://asiancentury.dpmc.gov.au/sites/default/files/white- paper/australia-in-the-asian-century-white-paper.pdf. Prakash, A. & Jennifer J. G. Corporate Responsibility, Multinational Corporations, and Nation States. 2011. http://faculty.washington.edu/aseem/BAP%20Special%20Issue%20Call%20for%20P apers.pdf. Read More